The cloud accounting provider is ramping up its use of machine learning and artificial intelligence.
Xero CEO and founder Rod Drury said the massive amount of data processed by the cloud accounting system presents big opportunities to apply machine learning and make major advancements for users.
He observed that the company has more than a million subscribers processing $1.5 trillion in transactions.
“We can really see what's going on,” Drury said during his keynote at the company’s major local event, Xerocon Melbourne 2017.
In applying machine learning to this data, one of Drury’s early goals is “code-free accounting”.
“We've been instrumenting everything” and over the next year Xero will become a different product as a result of implementing machine learning and artificial intelligence.
Xero is already seeing an 86 percent success rate in automatically coding transactions (such as allocating a phone bill to the correct account). This is achieved in part by being able to learn from transactions across the Xero user base, not just from the individual customer's use.
Xero Australia managing director Trent Innes said he expects this feature will eliminate transaction coding by users, though accountants and bookkeepers will still see and manipulate codes.
“It's taking away a massive pain point,” he said. Coding mistakes by users are common, and the most frequent mistake is picking the first code in the list. While professionals can and do fix these issues, that's a low-value service.
Apart from any compliance issues, the growing use of non-asset lending makes it important to ensure transactions are accurately coded. Lenders making decisions based on access to businesses' accounts are more likely to trust those with clean data, Innes said.
Accounting software is still too hard to use, and consequently Excel is still the most widely used tool, Drury commented. So, in the longer term, “Xero will tell you when you need to do something” rather than passively waiting for instructions, he said.
In its tenth year, the latest Australian Xerocon event attracted 3,000 attendees from 19 countries – some from as far away as the UK.